Thursday, May 31, 2012

Confidence Sinks as Progress in U.S. Job Market Stalls: Economy
- (www.bloomberg.com) Consumer confidence fell last week to the lowest
level in almost four months and more people than forecast filed claims for unemployment benefits, showing a lack of
progress in the job market is rattling Americans. The Bloomberg Consumer
Comfort Index dropped in the week ended May 13 to minus 43.6, a level
associated with recessions or their aftermaths, from minus 40.4 in the previous
period. Jobless applications were
unchanged at 370,000 in the week ended May 12, Labor Department figures showed
today in Washington. Diminishing employment gains, falling stock prices and the
prospect of government gridlock over the budget heading into the November
presidential election may continue to hurt household sentiment. The lack of a
sustained rebound in hiring damps the outlook for consumer
spending, which accounts for about 70 percent of the world’s largest
economy.

JPMorgan's future losses at the mercy of an obscure index -
(www.reuters.com) It's the biggest parlor game
on Wall Street: Estimating how large JPMorgan Chase & Co's (JPM.N) trading loss will be from a hedging
strategy that went wrong. The biggest U.S. bank by assets has already disclosed
$2 billion of paper losses, and Chief Executive Jamie Dimon said it could lose
another $1 billion or more. The losses will grow, some traders say, because it
appears JPMorgan has only sold a small portion of its position, leaving it
vulnerable to price swings in a thinly traded market. Others are not so sure
the bank will suffer much more than it already has. Dimon said the bank won't
rashly sell, and any additional losses could arise throughout the year. A
JPMorgan spokeswoman declined comment.

JPMorgan’s Trading Loss Is Said to Rise at Least 50% - (www.nytimes.com) The trading losses suffered
by JPMorgan Chase have surged in recent
days, surpassing the bank’s initial $2 billion estimate by at least $1 billion,
according to people with knowledge of the losses. When Jamie
Dimon, JPMorgan’s chief executive, announced the losses last
Thursday, he indicated they could double within the next few quarters. But that
process has been compressed into four trading days as hedge funds and other
investors take advantage of JPMorgan’s distress, fueling faster deterioration
in the underlying credit market positions held by the bank. A spokeswoman for
the bank declined to comment, although Mr. Dimon has said the total paper
trading losses will be volatile depending on day-to-day market fluctuations.

Bankia IPO Causes Shareholders $2 Billion Loss Post Bailout
- (www.bloomberg.com) Bankia SA (BKIA), the Spanish
lender taken over by the government in a bailout this month, struggled to
convince money managers to take part in its initial public offering less than a
year ago. The bank instead relied on individuals, investors who are typically
less equipped to analyze stock risks, to fill orders for the IPO in July. About
347,000 investors, most of them individuals like Josefa Rodriguez, an
86-year-old retired housewife from Madrid, bought Bankia’s shares. “My aunt is
a lady with almost nil knowledge of financial products and this wasn’t an
appropriate product for her,” said Marta Rodriguez, her niece, who spoke on her
behalf in a phone interview as Josefa lives in a residential nursing home.
“Staff at the bank was under a lot of pressure themselves to sell the shares.”

Spain Debt Fight Intensifies as Valencia Test Looms: Euro
Credit - (www.bloomberg.com) Spanish Prime Minister Mariano
Rajoy’s bid to fight off the European debt crisis is about to
intensify as his government wields new powers to tame the country’s indebted
regions. Regional officials from Rajoy’s People’s
Party will today face their first attempt to persuade Budget
Minister Cristobal Montoro that Valencia, which accounts for 10 percent of the
Spanish economy, can avoid default without intervention. Deficits beyond the
grasp of Madrid helped push the nation’s 10-year bond yields to a five-month
high of 6.5 percent yesterday. The collapse of regional finances is pushing
Rajoy to reverse 35 years of devolution that saw public spending soar for
projects in Valencia such as Formula One racing events and a new opera house.
The European Union predicted last week thatSpain will
miss deficit-reduction goals this year and in 2013.

Wednesday, May 30, 2012

Why Have American Small-Business Jobs Gone Missing? - (www.bloomberg.com) Big business, we keep being told, has been so hampered by regulatory
uncertainty over the past few years, it has been reluctant to hire workers. So
it is surprising to read the results of a little-known survey from the Bureau of Labor Statistics: Very large
businesses, it turns out, have been expanding their domestic workforces
relatively rapidly. If, since January 2011, businesses of all sizes had hired
at the same rate as those with 5,000 or more employees, we would have almost 4
million more jobs today. The BLS data
show that the overall weakness in the U.S. labor market reflects slow
employment growth among smaller businesses, following a recession that hit them
especially hard. The data come from the bureau’s Job Openings and Labor
Turnover Survey (JOLTS), which is commonly
used to examine trends in rates of hiring and job loss.

Rajoy
warns Spain faces debt market exile - (www.ft.com) Spain’s prime
minister warned his country risked being shut out of the financial markets
unless it was allowed to press ahead with its package of deficit cuts, as
yields on the country’s debt jumped. Speaking in parliament on Wednesday,
Mariano Rajoy said: “We must reduce the public deficit because there is a
serious risk that we will not be able to borrow, or borrow at astronomical
prices ... All these measures are to get out of the hole we find ourselves in.”
Yields on Spanish 10-year bonds touched 6.5 per cent for the first time since
November, taking them closer to levels that prompted bailouts for Greece,
Portugal and Ireland. Italy’s comparable benchmark bonds were trading at 5.94
per cent.

U.S. Said to Start Probe of $2 Billion JPMorgan Loss - (www.bloomberg.com) The U.S. Justice Department and
the Federal Bureau of Investigation in New York have begun a criminal probe of JPMorgan Chase & Co. (JPM)’s
$2 billion trading loss, a person familiar with the matter said. The U.S. is
looking into whether criminal wrongdoing occurred in relation to the losses the
bank reported last week, said the person, who declined to be identified because
the matter isn’t public. The inquiry is in its most preliminary stage, the
person said. The U.S. Securities and Exchange Commission and the Commodity
Futures Trading Commission, which regulates derivatives trading, also are
examining New York-based JPMorgan’s trading activities, according to people
familiar with those probes.

Obama
Now Claims The Power To Freeze Your Assets If You Oppose The New Government In
Yemen - (www.businessinsider.com)
Over at Salon, Glenn Greenwald has the goods on
the latest astounding power grab by the Obama Administration. According to The Washington
Post, Obama has just issued an executive order claiming the power to
freeze any assets you own, if you "directly or indirectly" obstruct
the new government of Yemen. There are hardly any criteria for judging
just how broadly this order can be interpreted. Here's the background: Abed
Rabbo Mansour Hadi is the new Yemeni president, and the former Vice President
of long-time dictator Ali Abdullah Saleh. Hadi was recently installed after an
"election" where he ran unopposed, prompting celebrations about a new
blooming democracy in the Middle East. Subsequently, the U.S. has sent millions
in aid and military assistance to the Hadi government, despite its unpopularity
among observers in the West and most importantly, the Yemeni people.

Tuesday, May 29, 2012

Homeowners
encroaching onto public sand - (www.latimes.com)
California has
ordered homeowners along some of Orange County's most coveted coastline to rip
out the landscaping, sprinklers and other upgrades that have crept steadily
seaward. On the tip of Balboa Peninsula, where multimillion-dollar homes sit
snug against the sand and the legendary waves draw crowds of bodysurfers, an
unlikely battle is taking shape. At the center are the lawns, lounge chairs,
hedges and playground equipment — even a rusty metal shark sculpture — that for
years have sprawled out from oceanfront homes onto the public sand. It's all
illegal, says the state of California, which has ordered homeowners along some
of Orange County's most coveted coastline to rip out the landscaping,
sprinklers and all the other upgrades that have crept steadily seaward.

Foreclosure
activity declines hurting investors, says report - (www.centralvalleybusinesstimes.com)
The pace of foreclosures in California is slowing to a crawl, according
to figures for the month of April compiled by foreclosure information company
ForeclosureRadar Inc. of Discovery Bay. In California, Notice of Default
filings were down 69.8 percent from the peak in March 2009, and 15.8 percent
from April 2011. Foreclosure sales also declined, however, foreclosure
investors purchased a record percentage of the limited inventory that was
actually sold. California investors purchased 41.3 percent of foreclosure sales
last month, the report says. Here are ForeclosureRadar’s figures for April for
Central Valley counties. The first figure is the number of homes entering the
foreclosure pipeline. The second is the percentage difference from April 2011.

Don't Forget About JPMorgan's
Other Huge Derivatives Losses - (www.businessinsider.com)
In an August 2010 commentary about JPMorgan's losses in coal trades I
wrote: "The commodities division isn't the only area in which JPMorgan is
vulnerable. Credit derivatives, interest rate derivatives, and currency trading are vulnerable to leveraged hidden bets.
Ambitious managers strive to pump speculative earnings from zero to hero."
At issue is corporate governance at JPMorgan and the ability of its CEO, Jamie Dimon, to manage its risk. It's reasonable to ask
whether any CEO can manage the risks of a bank this size, but the questions
surrounding Jamie Dimon's management are more targeted than that. The problem
Jamie Dimon has is that JPMorgan lost control in multiple areas. Each time a
new problem becomes public, it is revealed that management controls weren't
adequate in the first place.

"Realtor Charged with
Embezzlement, Grand Larceny and Fraud" - (www.patrick.net) A Watsonville real estate agent charged with nearly 50 counts of
embezzlement, forgery and theft pleaded not guilty to all charges in court
Friday morning and now faces trial. Grimaldo L. Sanchez Jr., 29, was arrested
in October and is accused of bilking clients out of thousands of dollars.
According to the criminal complaint filed against him, Sanchez is accused of
committing these crimes over a period of at least three years, with the most
recent incident named in the complaint having occurred on or about March 8,
2011. Among the 49 counts listed in the complaint, Sanchez is accused of
numerous charges of embezzlement by a public or private officer, in which he
allegedly misappropriated clients' funds in his capacity as a real estate agent
with Quintero Realty. According to Assistant District Attorney William
Atkinson, in the case of one of the victims, Sanchez allegedly bilked them out
of approximately $48,000, although he later repaid that money to them.

This
Is Clearly Going To Cost JPMorgan Much More Than $2 Billion - (www.businessinsider.com) JPMorgan
announced a $2 billion loss Friday. When compared to its market cap and
other indicators, that goes Ouch!, but not much more. However, there’s
more going on. The bank has refused to state where in its operations the loss
was incurred. For good reason perhaps: the positions that caused the loss are
still rumored to be open. The main problem JPMorgan may be facing, and the 8%
loss in pre-market trading may be a sign players are on to this, is that we
probably already know where the loss is. A few weeks ago, the financial sphere
was full of stories about the London Whale, a JPM trader in London named Bruno
Michel Iksil, who had taken such massive - synthetic - derivative (gambling)
positions in a 125 company index that they were moving the market itself.

Monday, May 28, 2012

Ally’s Residential Capital Files for Bankruptcy - (www.bloomberg.com) Residential Capital LLC, the unprofitable mortgage company whose parent Ally Financial Inc. (ALLY) is
trying to repay a U.S. government bailout, filed for bankruptcy and plans to
sell most of its assets to Fortress
Investment Group LLC. (FIG) ResCap listed assets of $15.7 billion
and debt of $15.3 billion in a petition filed today in U.S. Bankruptcy Court in Manhattan. ResCap’s Chapter 11 filing is the
biggest so far this year, based on liabilities, according to data compiled by
Bloomberg. “The action by ResCap will enable Ally to achieve a permanent
solution to its legacy mortgage risks and put these issues behind us,” Ally
Chief Executive Officer Michael A. Carpenter said today in a statement. Ally
said it also may sell its international auto-finance and insurance operations
to help repay a $17.2 billion U.S. bailout.

GARY
SHILLING: Home Prices Will Plummet 20% From Here - (www.businessinsider.com) Despite
growing consensus that it is now cheaper to buy a home than rent one, Gary
Shilling, president of A. Gary Shilling & Co. says by previous standards
home prices are still high relative to rents. In his latest editorial in The Wall Street Journal, Shilling writes
while home prices have fallen 34 percent since their peak in early 2006, they
are not cheap if prices continue to fall: "But even if homeownership was
cheaper than renting, as some claim, buying a house now would be a disastrous investment if prices
fall another 20% or more." Shilling says homes are going to lose market
value in coming years because of excess inventories. He says there are an
excess of 2 million inventories and that it will take at least four years to
work off this excess and quite some time for those surplus homes to bring down prices:

European austerity bites deep into Spain - (www.washingtonpost.com) When officials in Madrid slashed support for alternative-energy programs
this year as part of the campaign of government austerity sweeping Europe,
ripples quickly hit this rural town with the cancellation of plans for a solar
energy plant. The decision forced several dozen layoffs at the company that
would have built and run the project, adding to an unemployment rate that is
running at 30 percent in the region. The move also undercut hopes at local
firms that had expected to provide heavy equipment and fencing for the plant.
At a cement company that was to supply material for the project, mixers now sit
idle and the fear of further layoffs looms. Hours after police in Madrid
arrested 18 people, thousands of demonstrators reassembled to protest the
government's harsh austerity measures. Police say the protests drew more than
70-thousand people nationwide this past weekend. The economic debate consuming
Europe comes down to the question of whether struggling countries should choose
austerity by clamping down on government spending to rein in unsustainable
deficits or pursue growth stimulated by more spending.

Credit-Default Swaps in U.S. Rise on Talk Greece May Exit Euro
- (www.bloomberg.com) A gauge of corporate credit risk increased for an eighth day, the
longest streak since January 2010, on concern that Greece will exit the single European currency. The
Markit CDX North America Investment Grade Index, a credit-default swaps
benchmark that investors use to hedge against losses on corporate debt or to
speculate on creditworthiness, added 3.6 basis points to a mid-price of 112.2
basis points at 8:25 a.m. in New York, according to prices compiled by
Bloomberg. The swaps index rose as Greek leaders struggled to form a government
following inconclusive elections May 6. The nation’s exit from the euro “is not
necessarily fatal, but it is not attractive,” European Central Bank Governing
Council member Patrick Honohan said
May 12.

Dimon Fortress Breached as Push From Hedging to Betting Blows
Up - (www.bloomberg.com) David Olson, a former head of credit trading in JPMorgan Chase & Co. (JPM)’s
chief investment office, learned about risk as a U.S. Navy nuclear submarine
pilot. When he joined the bank in 2006, his new commander, Chief Executive
Officer Jamie Dimon, was
transforming the once- conservative unit from a risk manager to a profit
center. “We want to ramp up the ability
to generate profit for the firm,” Olson, 43, recalled being told by two
executives. “This is Jamie’s new vision for the company.” That drive has now
shattered JPMorgan’s cultivated reputation for policing risk and undermined
Dimon’s authority as a critic of regulatory efforts to curb speculation by too-big-
to-fail banks. It also cost Chief Investment Officer Ina R. Drew, one of the
most powerful women on Wall Street, her job. As
U.S. and U.K. investigators descend on the firm following Dimon’s announcement
last week of a $2 billion trading loss, lawmakers are pointing to the breakdown
at the largest U.S. bank as evidence that tougher rules are needed.

Sunday, May 27, 2012

Greeks May Hold $510 Billion Trump Card in Renegotiation -
(www.bloomberg.com) Greece’s next
government may hold a trump card worth more than $510 billion if it heeds
voters’ demands to renegotiate its bailout with the European Union. The nation
owes about 400 billion euros ($517 billion) to private bondholders, public
bodies such as the International
Monetary Fund and European Central Bank and
other creditors, according to data compiled by Bloomberg. About 252 billion
euros of that’s due to official organizations that used their status to avoid
the losses suffered by ordinary bondholders when Greece restructured its debt
two months ago. Greek voters are demanding their leaders renegotiate the terms
of rescue packages that have imposed unprecedented austerity on the country
since 2010. One potential prime minister, Syriza party leader Alexis Tsipras,
has pledged to tear up the EU-led bailout agreement. With Greece owing a sum
roughly equal to Switzerland’s economy, the
fallout for taxpayers could be calamitous if the country walks away.

In Spain, a Debt Crisis Rooted in Corporate Borrowing - (www.nytimes.com) In a country with one of the highest levels of company debt in the
world, few businesses in Spain shoulder as big a burden asGrupo A.C.S., the global construction giant
whose debt woes have become a mirror image of Spain’s own increasingly severe
financial struggle. Saddled with a 9 billion euro ($11.7 billion) debt pile
that is twice the size of the company’s shrinking market value, A.C.S. is in
the midst of a frantic campaign to sell off assets, pay down debt and further
distance itself from a Spanish economy caught in a spiral of austerity and deflation. The Spanish government’s harsh budget cuts and
their depressive effect on the economy have prompted foreign investors to sell
Spanish stocks and bonds in droves. On Tuesday, Spanish stocks plunged 2.8
percent and the government’s 10-year bond yields spiked to 6 percent as Spain
moved to bail out its ailing banks, and uncertainty over Greece loomed.

Norway Dumps Ireland, Portugal Bonds on Euro Crisis - (www.bloomberg.com) Norway’s
sovereign wealth fund sold all its Irish and Portuguese government bonds after rejecting the
Greek debt swap and warned that Europe faces considerable challenges. The $610 billion Government Pension Fund Global returned
7.1 percent, or 234 billion kroner ($41 billion), as measured by a basket of
currencies, in the first quarter, the Oslo-based investor said today. Its
equity holdings gained 11 percent while its fixed-income investments rose 1.6
percent. The fund, which voted against Greece’s debt swap this year because it disagreed with being
subordinated to the European Central Bank, also said it reduced debt holdings
in Italy and Spain amid a broader
strategy to cut investments in Europe. The fund added government bonds from emerging marketssuch as Brazil, Mexico and India.

Spanish Banks Erode Creditors With ECB Loans: Mortgages - (www.bloomberg.com) Spain’s lenders are pledging some of their
best assets to raise record levels of secured funding, including from the European Central Bank,
eroding creditor safeguards at the same time the government is planning the
country’s largest bank bailout. Borrowing from the ECB rose 50 percent in March
from the prior month to 227.6 billion euros ($294.3 billion). Bankia Group is
among lenders that increased mortgage-backed debt issuance by 35 percent since
December 2007 to 535.1 billion euros, or 53 percent of their real-estate loans,
according to Spanish Mortgage Association data at
the end of 2011. Rodrigo Rato, Bankia
chairman, stepped down this week as part of a plan in which the government is
willing to inject public funds. Spanish lenders are increasingly depending on
the central bank and secured debt sales to lower funding costs after their return
on equity in 2011 was the lowest in more than four decades following the
country’s real-estate crash.

Mortgage
legislation splits California Democrats - (www.sacbee.com) The "60
Minutes"-style video climaxes with an assemblyman hustling through a
Capitol corridor and down a flight of steps, trailed by a constituent asking
where the lawmaker stands on controversial mortgage legislation. Assemblyman Felipe Fuentes, the Sylmar Democrat who
is the subject of "What Legalized Bribery Looks Like," says the piece
produced by liberal activists is a "lie." It also highlights how the
pitched political struggle over the future of California's mortgage law has roused
labor and activist groups into using guerrilla tactics to call out moderate
Democrats in an election year. "Embarrass and expose," said Steve Maviglio, a veteran Democratic
strategist and campaign consultant. "It's a very effective tool."

FHA New Foreclosures Jump as Modified Loans Default - (www.bloomberg.com) The number of Federal Housing Administration-insured home loans entering
foreclosure jumped in March after half the mortgages it modified to ease
repayment terms were in default again a year or more later. The FHA’s role in
lending to first-time buyers with poor credit and limited cash expanded after
the 2008 collapse of the mortgage market put it at the center of government
efforts to revive housing. The FHA allows down payments as low as 3.5 percent
for borrowers with a credit score of 580, below the 640 defined as subprime by
the Federal Reserve. “The credit standards are way too loose -- you can get into
a house with very little skin in the game, and if home prices drop by a small
amount, you’re underwater,” said David Lykken, managing partner at Mortgage
Banking Solutions, an Austin, Texas-based consulting firm. “We’ve got to start
getting reasonable about standards. What they’ve done so far, some very slight
attempts at tightening, don’t really count.”

Spain wants banks to find an extra $45 billion: sources - (www.reuters.com) Spain stepped up efforts to save its troubled banks on Thursday with a
plan to make them recognize huge losses from a property crash, but uncertainty
over the final cost of a rescue hit the euro, Spanish debt and global stock
markets. The centre-right government will demand that banks set aside 35
billion euros ($45 billion) against loans to the moribund building sector, on
top of 54 billion euros the banks are already provisioning, financial sources
said late on Tuesday. This would mark the latest in a string of reform plans in
the past week which include moving toxic assets out of some banks and staging
an estimated 10 billion euro state rescue of Spain's most exposed bank, Bankia.

Spanish Credit Risk Surges to Record on Bankia ‘Zombie’ Peril
- (www.bloomberg.com) The cost of insuring against a Spanish default surged to a record on
concern a bailout of Bankia SA
(BKIA), the nation’s third-biggest lender, won’t fend off a banking
crisis triggered by bad real estate loans. “While there is no danger of an
imminent collapse at Bankia, there is a risk that it becomes a zombie bank,
which has to rely on the European Central Bank to
fund it over the long term,” said Roger Francis, an analyst at Mizuho
International Plc in London. There is growing speculation Spain may become the fourth European nation to seek a
rescue as its lenders become overwhelmed by 184 billion euros ($239 billion) of
what the nation’s central bank terms “problematic” assets linked to property.
Of the 38 billion euros of real estate the Bankia group held at the end of
2011, about half was classed as either “doubtful” or at risk of becoming so,
according to the lender’s annual report.

Too
broke to go bankrupt - (money.cnn.com)
This year,
hundreds of thousands of Americans are expected to be too broke to file for
bankruptcy. The average cost to file for Chapter 7 bankruptcy protection, the
most common form of consumer bankruptcy, is more than $1,500, according to
recent research submitted to the National Bureau of Economic Research. As a
result, anywhere between 200,000 and one million consumers are estimated to be
unable to afford that steep cost this year. The research, conducted by a group
of professors from Columbia University, the University of Chicago and
Washington University in St. Louis, examined how bankruptcy filings spiked
after people received their tax rebates in previous years.They estimate that
another 200,000 consumers, who would otherwise not have enough money to file,
will use their tax refunds to pay for bankruptcy this year.

Wednesday, May 23, 2012

Greek Default Risk Returns as Bond Maturity Nears - (www.bloomberg.com) Two months after forcing through the biggest-ever sovereign bond
restructuring, Greece once again
faces the prospect of becoming the first developed nation to default on its
debt. The government taking office after this weekend’s election has 30 days to
decide whether to make today’s interest payment on 20 billion yen ($250
million) of 4.5 percent notes maturing in 2016, or default. Then, by May 15,
officials must decide if they’re going to repay the 436 million euros ($555
million) due on a floating-rate note issued a decade ago. These are among about
7 billion euros of bonds whose holders took advantage of being governed by
foreign rather than Greek law to sidestep losses suffered under the
private-sector involvement rescheduling, or PSI. Paying the holdouts in full
would arouse the ire of Greek taxpayers, as well as investors who cooperated
with PSI. A failure to pay would signal Europe’s debt crisis is worsening.

Germans warns Greece: no cuts, no aid - (www.reuters.com) Leading German politicians warnedGreece on Tuesday that
the country would not receive a cent more aid unless it fulfills all the
conditions of its international bailout. An election on Sunday in Greece failed
to deliver a parliamentary majority for the two big pro-bailout parties,
plunging the country into political limbo and increasing the risk that another
vote may be required to resolve the impasse. On Tuesday, the leader of the Left
Coalition party, which benefited from rising anger over austerity to take
second place in Sunday's poll, declared Greece's policy pledges under its
EU/IMF rescue null and void.

Greece braces for repeat elections - (www.ft.com) Greece is
bracing itself for a repeat general election after its centre-right leader
failed to win leftwing support to form a “national salvation government” after
Sunday’s inconclusive outcome at the polls. “We
are now heading for a second vote next month in a deeply polarised atmosphere,”
said a disappointed government official. The repeat election would probably
take place on June 17, he said.

Italian Banks’ ECB Borrowings Increase to Record High in April
- (www.bloomberg.com) Italian banks’ borrowings from the European Central Bank reached
a record high in April, as the country’s lenders took up almost one-fourth of
the funds offered to lenders amid revived concerns about Europe’s debt crisis. Total borrowing by Italian banks rose to
271 billion euros ($353 billion) from 270 billion euros in March, the Bank of Italy said on its website today. Most of the funding,
about 268.4 billion euros, was from longer-term refinancing operations, while
2.6 billion euros came from the main refinancing operations, the data show.
Lenders in the entire euro area borrowed about 1.13 trillion euros from
the ECB, according to the central bank.

Wall Street Banks Depressed in Shift Defying Blankfein - (www.bloomberg.com) For banks such as Citigroup Inc., Goldman Sachs Group Inc. (GS) and Deutsche Bank AG (DBK), the
downpour shows few signs of stopping. Almost four years after the financial
crisis, their stocks are trading below liquidation values as investors like
Boston-based MFS, which manages $285 billion, forecast no rebound in revenue or
profitability soon. Last month’s shareholder rejection of executive pay at
Citigroup is the most public symptom of the frustration with large lenders and
their managements. “For whatever you’ve seen publicly that’s happened in the
last six months on pay, multiply that times 10 and that’s what’s actually going
on in private” between investors and bank executives, said Benjamin Hesse, who
manages five financial- stock funds and leads a team of 15 analysts at
Boston-based Fidelity Investments.